HEIBERG ESTATES NEWSLETTER: NOVEMBER 2024
Dear Property Partners
There is hope! We all are aware that 2024 has been for so many people a very challenging year. But as they say as long as the end is good, all is good. There are indeed many positive factors that are contributing to a positive ending this year that will also lead to a much more positive start for the New Year – and which will also filter through and have a positive impact on our SA Property Market.
Several leading economists are predicting that with our much more broad-based and representative Government of National Unity (GNU), which is working and building up momentum towards economic reform, fiscal discipline, and recovery, a much better and more economically vibrant 2025 can be expected. The International Monetary Fund is much more optimistic for stronger economic growth and job creation for the year to come. Load shedding has subsided drastically and new impetus in all our industries is noted, whilst yet another interest rate cut as announced last week, was widely welcomed. The fact that the Government is taking hands with the private sector to curb corruption and to address challenges in our power network, transport, and logistic sectors as well as enhancing structural reforms, will stimulate economic growth and sustainable job creation. All of this also allows our property sector to benefit from it on an ongoing basis.
Heartwarming is the fact that our inflation rate is under control and is well within the SA Reserve Bank’s (SARB) target band of 3%-6% which in addition also contributes to a better macro-economic environment. Inflation has dipped below the SARB target band to 2.8% last month, the first time below 3% in 53 months – and the lowest in more than 4 years. Inflation was the highest so far this year in February at 5.6% and halved in the past 8 months, which is quite an achievement! We know how eagle-eyed the SARB is when making decisions to cut the repo rate and what huge inflation plays in their rate cut decisions, so this is indeed positive news.
With the correct Government support and guidance, some leading economists are predicting the potential scenario of 2% to 3% economic growth over the next 5 years which is so necessary in order to also address our very high unemployment rate. Recently already our labour force showed relatively broad-based job gains and reducing unemployment figures – which could lead to more affordability, especially in the lower price segment to buy property. With the latest .25 basic points reduction announced on 21st November, the prime lending rate is now 11.25% and the repo rate 7.75%.
Optimism is also visible in our Construction Industry where building contractors and developers are much more positive about our state of affairs due to our new GNU and especially the much more stable provision of electricity. This optimism is especially visible in the number of Residential- and Commercial Developers, contacting Heiberg Estates on a much more frequent basis for available development land in Pretoria’s Old East. Pretoria has a huge presence of students who need accommodation and this ongoing state of affairs, stimulates the sectional title development market around the University of Pretoria. We are especially very optimistic about 2 751m² development land for up to 200 units per hectare that Heiberg Estates just listed for a high residential development opposite Tuks in Lynnwood Road – link: Men335-NEW RELEASE – SOLE MANDATE PERFECT ADDRESS – DEVELOPMENT LAND: BORDERING LYNNWOOD ROAD – OPPOSITE TUKS HOSTELS, EXCELLENT LOCATION!! – Heiberg Estates
BetterBond also reports positive news that compared to the fourth quarter last year, home applications increased by 30% while the quarter-on-quarter increase was a very positive 18%. All of the above mentioned, clearly indicates that the 2 interest rate cuts as well as increased private sector employment improving the financial disposition of households, have most probably started a gradual recovery in property market activity. The rise in market activity also leads to shorter selling times. Properties for sale now and market-related priced, stay on the market for an average of 11 weeks and 2 days versus the 12 weeks and 2 days recorded in the previous quarter, before being sold.
A further huge boost for the existing, general positive sentiment over a broad front, is the fact that Standard & Poor’s Global Ratings recently announced a positive outlook on South Africa’s credit rating which points to an improving country risk premium and suggests upside risks to the longer-term growth forecast. Hopefully this will be the start of an extended process to get South Africa back on track to exit it’s junk status and regain international trust and private investments in our country which will also contribute to economic growth and much-needed job creation. Fitch Ratings and Mood’s Investor Service both have given South Africa stable prospect ratings.
Looking at next year, one of the unknown factors is what impact of the re-election of Donal Trump as US President, will have on our economy – as well as our property market – especially looking at the Rand/Dollar exchange rate because a weaker rand will inevitably impact on inflation and could slow down further interest rate cuts during the course of 2025, resulting in a knock-on effect across our property market. However, just time will learn and for now, it will be awaiting game.
In spite of whatever challenges and economic headwinds our Rainbow Nation has faced in the past, the SA Property Market came through and has proven its resilience, time after time! We are all hopeful that the focus on economic growth which is embedded in sustainable macro-economic stability, the activation of structural reforms (especially in transport and electricity provision) and the sustainment thereof, the enhancement of state capacity, the support of investment in our infrastructure, the anchoring of our inflation target at around 4.5% – just to mention a few – will be achievable with our rainbow nation taking hands across all borders.
All signs are there that our SA Property Market will rerate and gain momentum in 2025 in terms of improved property interest, higher demand for property investments, higher sale volumes, and increasing property prices, especially with declining borrowing costs and with another interest rate cut expected early in 2025 which will provide vital relief and further stimulus, to our property market.
To you our dear Clients, Friends, and Colleagues, the Heiberg Estates Team would like to thank you for your much-treasured loyalty, support, business, and kindness over the past challenging year.
May I and my Heiberg Estates Team wish you a blessed, happy, and peaceful Festive Season and 2025 – filled with highlights, prosperity and good health.
Your sincerely
Bambie & Heiberg Estates Team
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